Papermaking conglomerate YFY Inc (永豐餘控股) yesterday reported a drop in its second-quarter profit, saying it had been dragged down by a capacity adjustment at its Yangzhou plant in China’s Jiangsu Province and the devaluation of the Chinese currency.
The paper manufacturer said it dipped into the red with a net loss of NT$116 million (US$3.7 million), or a net loss per share of NT$0.07. This compared with a net income of NT$281 million in the same period last year.
“The losses are due to a weakening industrial-use paper business, in particular, output from the Yangzhou plant,” YFY spokesman Yin Kuo-tang (殷國堂) told an investor’s conference in Taipei.
Yin said that the Yangzhou plant has been working on a new capacity plan, hoping to raise its utilization rate for industrial-use paper. The adjustments affected the group’s total revenue.
In the second quarter, sales in the industrial-use paper sector dropped 6.1 percent to NT$5.29 billion from the previous year, contributing 33 percent of the group’s total revenue.
In addition, the company suffered from the yuan’s devaluation, as its production bases in China mainly use the yuan for trade.
“The losses from the yuan’s devaluation reached about NT$440 million in the second quarter,” Yin said. “[Our] household-use paper business in China just started to make profits this year, but the profits were offset by foreign exchange losses.”
Despite the loss, YFY gave a positive outlook for the rest of the year based on its household-use paper business.
The company has also started focusing on its e-commerce platform in China, which helped boost sales in the household-use paper segment, Yin said.
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